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Mortgage Applications Jump 3 Percent on Lowest Rates in 3 Years

Mortgage Applications Jump 3 Percent on Lowest Rates in 3 Years
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Wednesday, 22 June 2016 08:29 AM

The number of mortgage applications in the U.S. rose last week, boosted by lower interest rates.

Total mortgage application volume increased 2.9 percent last week on a seasonally adjusted basis from the previous week. Applications are now nearly 35 percent higher than one year ago, when rates were considerably higher, according to the Mortgage Bankers Association.

Applications to refinance home loans drove the volume, rising 7 percent from the previous week, seasonally adjusted. Applications to purchase a home, which are less sensitive to rates on a weekly basis, fell 2 percent for the week but are 12 percent higher than a year ago.

The refinance share of mortgage activity increased to 57.7 percent of total applications from 55.3 percent the previous week. The adjustable-rate mortgage share of activity increased to 5.7 percent of total applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since May 2013, 3.76 percent, from 3.79 percent, with points increasing to 0.33 from 0.32 (including the origination fee) for 80 percent loan-to-value ratio loans, Freddie Mac reported.

"Rates fell on concerns that Britain may vote to leave the European Union later this week. Although beliefs about the likelihood of an exit have since moderated, the 'Brexit' vote promises to bring continued volatility to markets," said Lynn Fisher, MBA vice president of research, CNBC reported.

"Refinance applications rallied last week on a 3 basis point drop in mortgage rates to the lowest level since May 2013. Notably, the jumbo rate fell to 3.70 percent last week, its lowest level since MBA started the series in 2011."

Forbes.com explained that although "it sounds surreal, but a vote on Brexit — short for “British exit” from the European Union — actually could affect the housing market here. Bankers, economists and big investors worry that Brexit could destabilize the continent and weaken one of our biggest economic and political allies."

Forbes also explained that "the inevitable market volatility — never a good thing — as traders try to figure out what it all means if Britain goes its own way. Uncertainty in financial markets typically makes U.S. mortgages cheaper in the short term. But a vote to exit the union also could trigger recession in some countries, which is bad for our overall economy in the long run."

Fed Chair Janet Yellen and her team signaled that they’ll keep rates on short-term lending low for longer than they had first anticipated.

The "Fed decision to once again stand pat on rates, as well as growing anticipation of the U.K.’s upcoming European Union referendum, will make it difficult for Treasury yields and — more importantly — mortgage rates to substantially rise in the upcoming weeks,” Freddie chief economist Sean Becketti told Forbes.

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The number of mortgage applications in the U.S. rose last week, boosted by lower interest rates.
mortgage, apllications, loan, rates
Wednesday, 22 June 2016 08:29 AM
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